Analysis Paralysis

Hi all,

I’m suffering from severe analysis paralysis. I’ve been trying to work out what to do in our current situation and am going in circles.

My partner and I have saved a good amount of Money ($170,000) which was meant for a house deposit. We’ve spoken to a broker and have applied for a home loan and awaiting pre approval for a $400,000 loan.

Unfortunately we’re in a situation where we don’t know where we’ll be living in the next six months due to my contract ending and unsure if it will be renewed.
We’ve been dismayed at the skyrocketing house prices and uncertainty around my job (I’ll always have work just don’t know where it will be). My partner is permanent but currently living in a different state…. She’s the safe one for our loan approval.
We want to buy but unsure if rentvesting is maybe our only choice right now. Also the thought in the back of our minds is the possibility of falling house prices, upcoming election which may lead to a revised first home owner grant and the possibility of saving us thousands and whether PPOR is smarter.

I realise we are lucky to be in the position we’re in but can’t help be dismayed that our money is doing nothing for us right now.

Maybe we should just invest in shares until we know where we are going to live?

Any advice or thoughts would be much appreciated.

The analysis paralysis continues….

 

The preapproval looks low. What are your incomes?

 

yes not sure if we should aim higher, we don’t earn too much. $75K and $55K.

 

Do what you are good at.

You are excellent savers, so do that. Invest if u like.

When it is clear where u will be .... jump in.

It isn't a race with others, it's just your journey. More pluses than minuses, so you should be fine.

 

Thanks For your thoughts, maybe you are right. It’s just we’ve been saving for sooo long and we are getting disgruntled with ourselves for not putting our money to good use. Interest rates being so low and all. I feel like we’ve been stagnant for too long and without our money working for us.

 

Well I definitely wouldn't be doing this if you need the money in the short term. Your money could see a big haircut in the stockmarket when you need it the most.


My gut tells me you maybe want too much certainty of financial outcome which is why you haven't deployed your savings into an asset yet.

Your work situation is probably just another reason to delay. There is always risk. By not deploying your funds in the last year, look at that opportunity cost.

Search for the best value deal you can find and pull the trigger.

 

talk to a mortgage broker and find out your maximum borrowing capacity. You can always work down from there.

how long have you been saving and how much property buying power have you lost? Why didnt you buy in the past? If its for the same reasons as now (uncertain job location, uncertain market) when will it be certain?

If it will never be certain, will you ever be willing to buy even when there is uncertainty? If you never buy, what will the result be?

 

I am not going to sugar-coat this. If you don’t have a thick skin, skip this post.

IMHO you haven’t started your analysis or you have conducted lots of the wrong analysis.

Read my next comment.

This is the very first question you need to answer. The journey to buy a PPOR is TOTALLY different to buying an IP.

If you don’t understand the difference, I would suggest more research/analysis.

Most investors/businesses fail because their expenses exceed their income.

Your incomes are rather low, especially if these are before-tax.

Have you thought about investing in yourselves?

Are you both actively chasing promotions?

Are you both seeking a second job?

Have you considered starting an after-hours, home business?

…

There are many ways to boost your incomes. Do more research/analysis!!!

You left out rising interest rates, crashing sharemarket, global cyber attack, rising fuel prices, another global pandemic, a global conflict/war, Earth being hit by a meteor, …

These are risks that every investor/business owners has needed to consider for hundreds of years.

That is why investors undertake risk management and develop risk management plans. Do more research/analysis!!!

Totally agree

 

Just before this post becomes more unhelpful than helpful, there are some absolute fundamentals, including that financial well being for ppl with their own house is much more likely than without, in a steady marriage type set up or similar than divorced and people are happier in a job they like rather than a job that has $$ rewards.

You don't want to sell your soul.

You have excellent savings!!

If 150k is your 20% and u can manage a mortgage for a fixer of $600k, then buying at 750k seems possible ( subject to your final location ).

Have some confidence in yourself, partner and existing circumstances...... and build from their.

 

IMHO, your post is leaning more towards the unhelpful than the helpful

Around two-thirds (66%) of Australian households owned their home in 2017-18 – either with or without a mortgage. Of course, these folk feel good.
Housing statistics in Australia: home ownership & rent | Savings.com.au
Whereas, only 16% of Australians own one of more IPs; 84% of Australians don't.
Out of this 16% who own an IP, 71% own only one - not what I would call true investors.
For me, true investors, those who own 2+ IPs, account for only 4.6% (16% x 29%) of Australians and their financial well being is likely to be positive.
How many property's do investors own? | Your Investment Property (yourinvestmentpropertymag.com.au)
Your quote above is a bit like saying that most men in Australia have not experienced the joy of bearing a child.
A true statistic but no bearing on helping a newbie investor.

A fact that has no bearing on helping a newbie investor.

Any budding investor with half a brain should have/should be seeking both, a job they like with high $ rewards. Cashflow is key to their success.
Those in jobs they hate and/or jobs that pay poor aren't likely to become successful investors.

Don't understand this at all.

Investing should be treated like a business - develop a plan (including a risk management plan), monitor one's progress against the plan and take corrective action where required, focus on cashflow, income and expenses, ...

Business that don't do this tend to fail; same tends to happen to investors ...

Confidence tends to follow knowledge, skill and experience ...

 

100% agree. I'd also add, as knowledge/experience increases, risk tends to decrease.

 

Damn it…. Just do it…. just dont buy an apartment

 

I was simply pointing out some positives, nothing in my post was critical or unhelpful. But it was different from yours. Perhaps OP can cherry pick a little.

Wealth destruction comes from divorce / separation, as does destruction of lives. It has a big bearing.

I am impressed with the savings, that is a great start. OP seems like a hard working competent person, much to be admired in that.

You shouldn't sell your soul to become rich. Better to sell a kidney ( opinion only of course ).

@MTR says ' just do it' ... perhaps the best advice of all.

 

Real asset inflation rate is currently 20%+ p.a.

The last 5 years has been ~10% p.a.

Here is a great rundown of why saving money in the bank is not a great long term strategy.

www.wtfhappenedin1971.com

 

Because one has a better idea of what works/doesn't work and one has some experience under their belt.

For example, better/stronger risk management plans.

 

It is a lot easier to destroy wealth that create it (my opinion of course).

... and their are many ways one can be successful at it (destroying wealth, that is).

A good friend of mine inherited 4 x houses on 3 x titles in Brisbane in 1997. In today's dollars, they would be worth at least $4M. He died a year ago, basically homeless; I won't go into his life, etc (he was an exploration geologist) but his estate should have been worth $10M to $15M (as a minimum).

He didn't have a plan, he had no understanding of the risks he was taking. he didn't monitor his financial situation, he didn't take any corrective action over the last 15 years of his life (where things jjust cintinuously got worse and worse), he certainly didn't focus on cashflow, his expenses way exceeded his income, ...

He just did it. His 19 year-old son (his only offspring) really dipped out - so sad to see as it could have/should have been so different.

IMHO, this is the worst advice I have ever seen on PC.

Yep, this is one great way to destroy wealth (my opinion of course).

 

Got to say I was impressed with savings too, considering income.

 

According to whirlpool forum geniuses, property investors don't have souls.

 

So we have brains

I never read whirlpool

 

I can imagine a plane going down, and losing all souls on board ...... AND a property investor